Breach of Share Purchase Agreement - Accountancy Firm’s Share Sale

The Client

Individual client and limited company.

Value of Dispute

£145,000

The Commercial Dispute

Escalate acted on behalf of an individual client and a limited company (the Vendors), who were shareholders of an accountancy business. On completion of a share sale, they ran into problems with the Buyer reneging on the deal – a clear breach of the share purchase agreement.

Having sold their shares for an agreed fee, which was subject to a share purchase agreement (SPA) and to be paid over a number of instalments, the Buyer defaulted on the agreement. They paid the first instalment, however failed to pay all of the deferred consideration.

The Buyer claimed that the Vendors were in breach of the warranties given in the Agreement relating to company performance. They suggested that the accountancy firm had suffered a loss of trade since its purchase, and claimed these losses should be deducted or offset against the deferred sums due.

The Vendors argued that the alleged losses were calculated based on analysis that was inconsistent with the prior three years statutory accounting processes, which showed business performance remaining at the same level or increasing.

How Escalate Resolved – Services Used

The Vendors approached Escalate to enforce their rights under the SPA. Despite all manner of attempts to frustrate enforcement by the Buyer, Escalate invoked the dispute resolution mechanism in the SPA, and via an Expert Determination secured a substantial recovery.

Client Testimonial

“I wanted to say thank you to the Escalate team for pursuing the outstanding sums due from the sale of our accountancy practice. Having previously engaged the original legal firm involved in the sale of the business, there was no real progress with the buyer to make the payment since they were using a variety of tactics to avoid settlement over a period of three years. 

Escalate, once engaged, easily navigated the pitfalls and hurdles raised by the buyer. The situation was resolved quickly, and it was great that we were kept informed of all the steps involved along the way. I would definitely recommend Escalate to others in the same situation.”

 

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